Starting a business in Portugal can be incredibly rewarding — the country offers a favorable tax environment for foreign investors, growing startup hubs, and a relaxed lifestyle that attracts entrepreneurs from around the world. But navigating the local bureaucracy and compliance requirements isn't always easy. Many first-time founders (especially international ones) make costly mistakes that can delay operations or lead to unnecessary fines.  

Here are the 10 most common mistakes entrepreneurs make when starting a business in Portugal — and how to avoid them.  

1. Skipping the NIF Step  

A  NIF (Número de Identificação Fiscal) is your Portuguese tax number — and you  must have one before registering a business, opening a bank account, or signing a lease. Many entrepreneurs don’t realize they need this early on.  

Tip: Read our full article: What is NIF and Why It Is Important to Start a Business in Portugal?  

2. Choosing the Wrong Business Address  

The registered address of your company affects your tax obligations, municipality fees, and even potential inspection zones. Some founders use a temporary or non-compliant address, which can delay licensing or lead to penalties.  

Tip: Not sure what address works best? Start with our guide: How to Choose the Right Business Address When Registering a Company in Portugal  

3. Underestimating Bureaucracy and Delays  

Portugal has made strides in reducing red tape, but certain registrations (like Social Security or sector-specific licenses) still involve manual steps and local approvals. Many foreign entrepreneurs assume it’s all online — and are caught off guard.  

4. Failing to Understand VAT and Corporate Tax Rules  

Some businesses delay VAT registration when they shouldn’t, or don’t prepare for quarterly filings. Others confuse the simplified tax regime with the standard corporate tax. Errors in these areas often trigger audits or late-payment fees.  

Tip: Learn about essential tax obligations in our article: Tax Regulations You Should Know Before Starting a Company in Portugal  

5. Choosing the Wrong Legal Structure  

LDA (Private Limited Company) is the most popular structure, but it’s not the only one. Entrepreneurs sometimes choose a sole trader setup to save time, only to later regret limited scalability or liability exposure.  

6. Not Opening the Right Business Bank Account  

Opening a bank account in Portugal can be a long process — especially without proper documentation or a trusted local intermediary. Some banks may reject applications without a solid explanation of your business activity.  

Pro Tip: Work with a local consultant like FreeAcing to streamline account setup and ensure compliance from day one.  

7. Missing Social Security Registration Deadlines  

You must register your business and yourself (as a managing partner) with Portuguese Social Security within strict timeframes. Many new entrepreneurs assume this happens automatically — it doesn’t.  

8. Neglecting Mandatory Insurance Policies  

Depending on your activity, you may need specific types of insurance (e.g., public liability, professional indemnity, or workers’ compensation). Skipping these can result in heavy fines or shutdown orders.  

9. Hiring Without Labor Law Compliance  

Portugal has detailed labor laws covering contracts, minimum wages, and severance rights. Hiring freelancers or employees without proper contracts and registrations can cause serious legal trouble.  

10. Going It Alone Without Local Guidance  

Starting a business in a new country involves much more than just registration. Navigating tax systems, banking, licensing, and HR requirements is smoother and safer with expert support.  

FreeAcing offers end-to-end support for company creation, accounting, administration, and HR in Portugal. We help you avoid mistakes, save time, and focus on growing your business.  

Final Thoughts  

Portugal is one of the most attractive destinations for entrepreneurs in Europe — but it pays to be prepared. Avoid these common mistakes, and you’ll be well on your way to building a successful company.  

Need help starting your business in Portugal? Contact FreeAcing today and let us guide you from setup to success.